Study to be released today finds the program would cost the Ottawa treasury about $3 billion a year and direct the lion’s share of tax savings to affluent single-income families.

Steve and Tanya Wellburn and their children Crispen, Gregory and Fiona look on as Prime Minister Stephen Harper makes a campaign stop in their back yard in Saanich, B.C., Monday March 28, 2011. More on this family's interest in income splitting: http://on.thestar.com/1l25C8u

By:Julian BeltrameThe Canadian Press, Published on Tue Jun 10 2014

OTTAWA—Federal employment Minister Jason Kenney says the Harper government has no intention of backing away from its income splitting pledge, despite a new report concluding the plan would exacerbate income inequality and bestow the most benefits to the West.

Kenney made the statement in the House of Commons on Tuesday while debating an NDP motion to do away with the idea.

According to a study by the Broadbent Institute, the income splitting plan is more expensive than previously believed, helps even fewer Canadians than earlier thought and would benefit Conservative strongholds such as Alberta and Saskatchewan more than other provinces including Ontario.

The report from the left-leaning public policy group reaches similar overall conclusions as previous studies on the controversial 2011 election promise, whose implementation is contingent upon Ottawa balancing its budget.

As the C.D. Howe Institute found in 2011, the proposal would provide no benefit to the vast majority of families while giving the biggest benefits to the country’s most affluent single-income families.

But the latest analysis digs deeper into the data, using Statistics Canada’s social policy simulation database, which estimates benefits for families in 2015, the expected year of implementation.

It finds the program would cost the Ottawa treasury about $3 billion a year and direct the lion’s share of tax savings to higher income families, while providing no benefit at all to about 90 per cent of households. Those numbers are slightly higher than estimated by C.D. Howe in 2011.

Among the most surprising findings is the large disparity in the regional breakdown of benefits.

It turns out that among the target group — families with minor-age children — the biggest winners by far reside in Alberta, where the average annual tax saving would be $1,359, while families in Saskatchewan come in second at $1,070. Those two provinces, which have a combined 42 federal ridings, sent 40 Conservative MPs to Ottawa in the 2011 election.

In Ontario, the average annual benefit for families with children under 18 would be $874. More than half of these families, or 53.3 per cent, would receive no benefit, 32.5 per cent would get less than $2,000, nearly 11 per cent would get between $2,000 and $5,000 and 3.4 per cent would receive more than $5,000.

“In Alberta, there are relatively more men in high income jobs, and relatively more stay-at-home wives compared to Ontario, so they stand to benefit more from income splitting,” the Institute’s senior policy advisor Andrew Jackson told The Star’s Lisa Wright.

“Ontario used to be a rich province but it’s increasingly closer to the national average income now,” he said.

The study shows families in Prince Edward Island would get the least average benefit at $488, followed closely by Quebec families with children, which would average $510 in benefits. Those two provinces were among the least productive for the Conservatives, electing only six Tories among their combined 79 MPs in 2011.

“The labour force participation rate of women with a child under age 16 is 80.4 per cent in Ontario — about the same as the national average of 80.1 per cent —compared to 85.7 per cent in Quebec and 72.6 per cent in Alberta,” Jackson noted.

By ascending order of benefits, qualifying Nova Scotia families would average $727 in benefits, followed by Manitoba ($772), New Brunswick ($787), British Columbia ($853), Ontario ($874) and Newfoundland ($925).

Broadbent Institute executive director Rick Smith has no explanation for the regional disparity other than that the program as unveiled was designed for a particular type of family — the so-called “Leave It to Beaver” traditional home with a principal breadwinner and a stay at home spouse who takes care of the children.

“It turns out there are few families of that type but there are more of them in Alberta than in Quebec,” he said.

The program would allow the higher earning spouse to transfer up to $50,000 to the lower earner for tax filing purposes.

Overall, the study shows that 90 per cent of families would get no benefit, either because they have no children under 18, are single-parent households or because the two working spouses are in the same tax bracket.

To benefit the most, one spouse must make $100,000 more than the other and have a taxable income above $136,270, the highest marginal rate.

Of families with children under 18, the average tax saving is calculated at $841, although that includes the 54 per cent of those households that receive no benefit at all.

But for 147,000 Canadian families with a high-income breadwinner, the average benefit would be $7,128.

The current finance minister, Joe Oliver, has vacillated between supporting income splitting and leaving the door open to changes.

Although polls show income splitting is currently popular, Smith believes one reason is that most Canadians assume they will benefit, when in fact they likely won’t.

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